QR of Equal Pay

Nathan Grawe

published Dec 31, 1969 6:00pm

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paycheck

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Around this time of year, news stories often turn to the "gender pay gap." In part, this is a response to gender-equality activists such as the American Association of University Women who celebrate Equal Pay Day to mark the day at which women make up the gender gap from the previous year. This year's State of the Union address gave us a head start on the conversation.

Given the attention, it seemed useful to apply a little QR to the topic to gain a deeper understanding. If you click the link above, you will quickly learn that the gender gap is 23%. But who is in the sample? It takes a little digging, but you eventually find the answer: "full-time, year-round workers." That's a start, but a student armed with 10 Foundational Quantitative Reasoning Questions would know to press further by wondering how the concept of "full-time" is defined. The answer turns out to be anyone working over 35 hours is employed full-time. That well-prepared student might then wonder what is controlled for in this analysis. The answer is nothing other than full time status–not even hours worked.

A recent Labor Department study reports that the wage gap shrinks by 71% (to around 5%) after controlling for well-documented income-altering factors other than sex like hours worked, age, number of children, marital status, union representation, race, education, and fraction of women working in the person's industry and occupation. In other words, the gender pay gap is largely explained by choices.

So, does that mean that we can largely ignore complaints of discrimination? Clearly not. That women and men on the same career path earn the same income does not rule out discrimination that limits work choices. Are there barriers in the education system or in hiring that make it harder for women to end up in higher-paying positions? Does society push women into lower paying life paths? These are hypotheses that cannot be ruled out by the data.

But the tools of QR can help us focus in on the real explanations for an important observation.

QR of Equal Pay -- Discussion

I realize that the difference in pay between the genders is often explained as resulting from life experience differences. Years worked for men longer than women because they drop out for childbirth etc. But the fact that the amounts differ so much for women versus men is hard to get past. Recently the Obama admin was taken to task over this. It would be interesting for them to explain it based on such mitigating factors.